A creditor or a group of creditors can be considered as a party to an application seeking transfer of case from the High Court to the National Company Law Tribunal regarding the winding up of a company. The Supreme Court bench consisting of Hon’ble Chief Justice S.A. Bobde, Hon’ble Justice A.S. Bopanna and Hon’ble Justice V. Ramasubramanian, delivered an excellent judgement regarding requirements of transferability of a case in the matter of M/S Kaledonia Jute and Fibres Pvt. Ltd. v. M/S Axis Nirman and Industries & Ors. [Civil Appeal No. 3735 of 2020].  

The respondents filed a petition before the High Court under Section 433 of the Companies Act, 1956, pleading for the winding up of the first respondent company as it was unable to pay debts. The court ordered the admission of the petition and directed for the publication of the advertisement of the petition in accordance with Rule 24 of the Companies (Court) Rules, 1959. Pursuant to the publication, the court directed the winding up of the company and appointed an official liquidator directing him to take over the assets and books of accounts of the Company. The respondent filed an application for recalling the order but the liquidator opposed the application on the grounds that the respondent owed money close to Rs. 27 crores to various creditors. In the light of this, the court kept the order of winding up in abeyance but directed the liquidator to continue to keep in custody the assets of the company.

The appellant, who claimed to be a creditor of the respondent moved an application before the National Company Law Tribunal (NCLT) under Section 7 of the Insolvency and Bankruptcy Code, 2016, that the respondent had failed to pay a sum of Rs. 32 lakhs to the appellant despite repeated demands. The appellant moved an application seeking transfer of this case from the High Court to the NCLT which was rejected by the HC on the grounds that the requirement for winding up order had already been passed. It was against this order of the HC that the financial creditor came up with a civil appeal to the Supreme Court.

The Supreme Court in its decision, reiterated the provisions relating to the transfer of case regarding winding up of company and stated that “the transferability of a winding up proceeding, both under Rule 5 as well as under Rule 6, is directly linked to the service of the  winding up petition on the respondent under Rule 26 of the Companies (Court) Rules, 1959. If the winding up petition has already been served on the respondent in terms of Rule 26 of the 1959 Rules, the proceedings are not liable to be transferred. But if service of the winding up petition on the respondent in terms of Rule 26 had not been completed, such winding up proceedings, whether they are under Clause (c) of Section 433 or under Clause (a) and (f) of Section 433, shall peremptorily be transferred to the NCLT”. After this, the court dealt with who will be considered as a “party”. Section 446 of the Companies Act, 1959 states that “an order for winding up shall operate in favour of all the creditors and all of the contributors for the company as if it had been on the joint petition of a creditor and of a contributory”. Thus the court stated that winding up proceedings are actually proceedings in rem and the entire body of creditors will be a party to the same. Hence, herein the court held that the appellant was infact a party and that the transfer was not restricted by the stage of proceeding as it was covered by the 5th proviso to Section 434(1)(c) of the act.

Relying on Forest India Ltd. c. Edelweiss Assets Reconstruction Co. Ltd. [(2019 2 SCR 477], the court found that parallel proceedings in the HC and NCLT  would demolish the entire object of the IBC, hence, the petitioner should be entitled to seek transfer of the pending winding up proceedings against the respondent. Therefore, the appeal was allowed and the case was transferred to the NCLT.

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In view of the position of law laid in SBI v. Ericsson, it would not be permissible for the learned Arbitral Tribunal to issue any such direction as would prejudice the rights of such third party secured creditors, over the assets of GIL was held in the case of Edelweiss Asset Reconstruction Company Ltd, acting in its capacity as trustee of the Earc trusts vs GTL Infrastructure Ltd. and Anr. , ARB. A. (COMM) 13/2020 by the bench comprising of Justice C. Hari Shankar.

The facts of the case are Edelweiss Asset Reconstruction Company Ltd. invoked Section 37 of the Arbitration and Conciliation Act, 1996 to challenge an order, dated December 17, 2019, passed by the learned Arbitral Tribunal, which directed M/s. GTL Infrastructure Ltd. to pay Rs.240 crores to M/s. GTL Ltd. and to deposit ₹ 200 crores in an Escrow account, to be maintained by GIL.  Though Edelweiss was not a party before the learned Arbitral Tribunal but claims to be affected by the impugned directions and it is also claimed, by Edelweiss, that GIL and GTL are in collusion, and that they misled the learned Arbitral Tribunal into passing the impugned Order, suppressing the fact that Edelweiss had a first charge over the monies which GIL has been directed to pay to GTL or to deposit in the Escrow account.

The position, in law, that an Arbitral Tribunal cannot pass an order, which affects the rights and remedies of the third party secured creditors, while determining the disputes pending before it, was held in the case of  SBI vs. Ericsson, thus:

“5. There can be no dispute that the Arbitral Tribunal has no jurisdiction to affect the rights and remedies of the third party-secured creditors in the course of determining disputes pending before it…”

The Delhi High Court relied on SBI vs. Ericsson and held that Edelweiss, in fact, is a secured creditor of GIL, and the direction contained in the impugned order, affect the assets of GIL, secured with Edelweiss and other secured creditors, the direction, ex facie, cannot sustain.

The Court also held that, once a case for interference is found to exist, the appellate jurisdiction of the Court, under Section 37 would, in my view, also extend to modifying the order of the learned Arbitral Tribunal, in view of the inalienable indicia of appellate jurisdiction, as identified in Tirupati Balaji Developers (P) Ltd.

Thus, it was held that it is not permissible for Arbitral Tribunal to issue any such direction as would prejudice the rights of such secured creditors, over the assets of GIL and also in the present case interference, in order to protect the legitimate interests of the appellant, is justified the order of the tribunal has been modified invoking Section 37(2) of the 1996 Act.

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The quality of witnesses should be the criteria under Section 134 of the Evidence Act, rather than the number of witnesses, considering how common it is for witnesses to turn hostile in a trial. This remarkable judgement was passed by the bench consisting of Justice Sanjay Kishan Kaul and Justice Hrishikesh Roy of the Supreme Court in the matter of Jayantilal Verma v State of MP, [CRIMINAL APPEAL NO. 590 of 2015].

After the death of a lady in her matrimonial house, her brother alleged that the husband had murdered his sister. The couple had been married for 8 years and the brother alleged that his sister had off late been complaining of being harassed at the hands of her in laws and husband.

The post mortem reported suggested the death was caused due to asphyxiation owing to being strangled. Several witnesses turned hostile due to familial relations and the only reliable evidence remaining was the post mortem report and testimony of the doctor who conducted the post mortem and the husband himself. Earlier, the husband alleged that all members residing in the house were outside doing their work when the lady died. After going through the evidence, it was obvious that the marks on her neck and surrounding parts prove it was the case of strangulation. While giving his testimony, he added the fact that she died of a snakebite, which was also further completely negated by the post mortem report.

The trial court convicted the husband while acquitting the mother in law. The father in law passed away during the trial. On the basis of the acquittal of the mother in law, the counsel for the appellant argued that his client was not proved guilty beyond reasonable doubt and challenged the decision of the Trial Court.

The high court on the key witnesses turning hostile opined, “We are conscious that the case of the prosecution rests only on the testimony of PW-1 and the medical evidence. The statement of PW-1 was consistent and cogent except to the extent that in the earlier statement he had not mentioned the factum of the death being attributed to snakebite. However, that itself would not nullify the remaining part of his testimony. In fact, the said witness did not back out from the statement, but could not state the reason why the police did not record it in the FIR though it was mentioned”.

 Further, in light of the death taking place within the four walls of the matrimonial house, the court observed, “In our view, the most important aspect is where the death was caused and the body found. It was in the precincts of the house of the appellant herein where there were only family members staying. The High Court also found that the location of the house and the surrounding buildings was such that there was no possibility of somebody from outside coming and strangulating the deceased and that too without any commotion being caused or any valuable/jewellery missing.

We are confronted with a factual situation where the appellant  herein, as a husband is alleged to have caused the death of his wife by strangulation. The fact that the family members were in the home some time before is also quite obvious. No explanation has been given as to how the wife could have received the injuries. This is a strong circumstance indicating that he is responsible for commission of the crime. explanation regarding the cause of the death in the statement recorded under Section 313 of the Cr.P.C. and mere denial could not be the answer in such a situation”.

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Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded is a constitutional duty and responsibility of the Municipal Corporation has been pronounced by the Kerala High Court in case of the Dr. P.A. Mary Anitha vs Corporation of Kochi, Ernakulam, and ors., WP(C). No.24850 OF 2018(S) in the bench comprising of Justice S.Manikumar and Justice Shaji P.Chaly.

In the present case, Public Interest Litigation was filed by the Chairperson of an NGO namely Centre for Empowerment and Enrichment (CEFEE). According to the petitioner, she volunteers and aims primarily to enable differently-abled children to come up to the limelight of society and to live in dignity in the society.  The case projected by the petitioner is that the Corporation of Kochi, as well as the Public Works Department and their Nodal Agencies, have the duty and the responsibility to ensure that the differently-abled people are able to enjoy their rights to walk freely and fearlessly within the limits of Kochi city by providing safe and hindrance free footpaths to access the roads and they have failed in fulfilling it.

It is also submitted that Section 346 of the Kerala Municipality Act, 1994 casts duty on the first respondent Corporation to make the public streets and bridges vested in it and under the control of it to be maintained and repaired at the cost of the municipal fund and to meet the cost of all improvements to the same, which are necessary or expedient for the public safety or convenience. The Court also pointed out that under Section 207 and Section 208 and Section 346 of the Act, 1994  all public roads, streets, lanes and bridges other than National Highway, State Highway or major district road or roads classified by Government as such vest in the Municipality together with all pavements, stones and other materials and other things and duty of the Municipality to provide at the cost of the municipal fund, to such extend as the Government may, by general or special order to maintain the streets.

The Court held that there is a constitutional obligation along with the statutory obligation and held as:

 “ We are of the considered opinion that the cause put forth by the petitioner are genuine and bona fide in nature so as to protect the interests of the differently-abled persons, and we have no hesitation to hold that differently-abled people like any other citizens are entitled to enjoy the fruits of life and liberty guaranteed under article 21 of the constitution of India. That apart, the State also has a duty as per the directive principles of state policy under Part 1V of the Constitution.  Further, after the introduction of Part 1XA to the Constitution of India, Under Section 243W dealing with Municipalities, the Municipalities are liable to discharge such functions entrusted with them thereunder.”

Thus, Supreme Court held that we have no hesitation to hold that the Corporation of Kochi, as well as the Public Works Department, are duty-bound under the law to make necessary arrangements in the footpaths and the road so as to enable differently-abled persons to access the roads and the footpaths to their convenience.

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A public servant or official can be investigated against even without prior approval from the state government, unless the official can prove the investigation is being carried out with prejudice. The consent mentioned under section 6 of the Delhi Special Police Establishment Act, 1946 is merely directory and not mandatory. This remarkable judgement was passed by the bench consisting of Justice A M Khanwilkar and  Justice B R Gavai of the Supreme Court in the matter of M/S Fertico Marketing And Investment Pvt. Ltd. And Ors. Etc. V Central Bureau Of Investigation And Another Etc., [CRIMINAL APPEAL NOS. 760- 764 of 2020].

It was alleged that a few private individuals as well as public officials were involved in the selling of coal in the black market that lead to a loss to the tune of Rs.36.28 crore to the Central Government. The private individuals were named in the FIR by the CBI whereas, a chargesheet was filed against the public officials for misusing their authority and passing false status reports. The Single Judge hearing this case was faced with the question of whether the investigation carried out by the CBI was beyond its jurisdiction in light of Section 6 of the Delhi Special Police Establishment Act, 1946 (hereinafter referred to as “DSPE Act”).

The court opined that the investigation suffered from lacking inherent jurisdiction and held, “since in the present case, investigation conducted by the CBI was without the previous permission/consent of the Government of UP as such, was in breach of the mandatory provisions of Section 6 of the DSPE Act”. Further, it also laid down the principle that if any public servant, under the control of the State Government was named in the FIR, consent of the State Government would be required for investigation. But, if the official is not named in the FIR and is required to be contacted for further investigation in the matter, permission from the state government is not required.

The appeal before the Supreme Court arose as the High court held “that the question of consent can be raised only by the public servants who have been named in the FIR and not by the private individuals, who had come before the Court”. Thus, dismissing the appeals.

The counsel for appellant argued on two grounds. Firstly, that provisions of the PC Act can be levied only against public servants. Secondly, meeting of minds is a pre requisite for section 120 of the IPC. Thus, when read together, “the offence cannot stand unless there is a meeting of minds between public servant and the private individuals and as such, an FIR could not be registered. As such, for registration of FIR against the private individuals for the offences punishable under the Prevention of Corruption Act and other offences under the IPC, committed in the course of the same transaction or arising out of the same facts, the Members of DSPE have all the powers and jurisdiction. As such, we find absolutely no merits in the appeals filed by the private individuals”.

 The Supreme Court relied on the judgement passed in the case of H.N. Rishbud and Inder Singh v. The State of Delhi, ([1955] 1 SCR 1150) and State of Karnataka v. Kuppuswamy Gownder and Others, [(1987) 2 SCC 74] while it observed that, “In the present case, there are no pleadings by the public servants with regard to the prejudice caused to them on account of non-obtaining of prior consent under Section 6 of the DSPE Act qua them specifically in addition to the general consent in force, nor with regard to miscarriage of justice”.

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